Last Updated on January 7, 2021 by Yetty Akindele
What are cashback credit cards?
It thrills me to hear of any legit avenue to earn some money no matter how little. As a matter of fact, this is more exciting when earning is the result of spending! This is what cashback credit cards do. You literally earn a certain percentage of your spending back as income.
Percentages that can be earned vary from as low as 0.5% to as high as 4%. Canadian financial institutions occasionally offer higher rates, for instance during an introductory promo.
Money earned can either be applied to reduce the credit card balance. More importantly, It can also be credited directly to your savings account with some types of cashback credit cards. If you have no interest in earning points or air miles for your spending, consider cashback credit cards.
As with making any decision, you need to consider a couple of things before making your choice of a cashback credit card. In choosing a cashback credit card, look out for the following; percentage cashback offered, annual card fee(s), interest rates, benefits, and features as well as your spending habits.
How should I make a choice of Cashback credit card?
There is a wide selection of cashback credit cards being offered by financial institutions in Canada. The cashback credit cards on offer also have varying percentages being offered. The percentages also differ per category of spending chosen. These cards also come with additional features/benefits.
It makes the most sense to have credit cards that offer you the best percentages in a category you spend the most. If you have a large family, spend a lot on groceries you might want to choose a credit card option that gives you a high cash back percentage on grocery store purchases.
If you eat out a lot you might want to get a credit card that gives better cash back for the category of ‘restaurants’.
Overview of 6 of the Best Cashback Credit Cards in Canada for 2020
| Credit Card | Annual fee | Best For | Cash Back Reward | Requirements |
| Tangerine Money Back Credit card | $0 | Flexibility in choice of category | 2% in up to 3 categories of your choice (subject to some conditions) 0.5% in all other categories | Annual income of $12,000 |
| Amex SimplyCash™ Card | $0 | Fixed flat rate in all categories | 2.5% cashback on purchases (up to $150 cashback) for the first 3 months of membership, then; 1.25% fixed rate on all categories | Be a Canadian resident Be the age of majority in your province |
| BMO Cashback MasterCard | $0 | Best for grocery and recurring bill payments | 3% cash back on grocery, 1% cashback on recurring bill payments 0.5% cashback on all other categories | $15,000 income requirement |
| Tangerine World Master card | $0 | Flexibility in choice of category, car and mobile insurance benefits | 2% in up to 3 categories of your choice (subject to some conditions) 0.5% in all other categories | $60,000 personal OR $100,000 household OR $250,000 or more under management by Tangerine in savings account or other investment portfolios |
| Scotia Momentum® Visa Infinite Card | $120 | Excellent cashback card with a fee for grocery, recurring bills and gas | 10% cashback on the first $2,000 you spend in first 3 months from account opening. 4% cash back on grocery purchases and recurring bills 2% cashback on gas and daily transit 1% on all other categories | $60,000 personal OR $100,000 household income OR Assets under management of $250,000 |
| TD Cashback visa infinite card | $120 | Flexibility in redemption of cashback earned | 10% on all eligible purchases for the first 3 months up to a total spend of $2,000. 3% in Cash Back on eligible grocery purchases and gas purchases, and on regularly recurring bill payments 1% on all other purchases | $60,000 personal OR $100,000 household income |
Best Cashback credit card for flexibility in choice of category
Tangerine Money Back credit card
One key difference that sets the Tangerine cashback credit card apart from others is the flexibility they offer in terms of choice of categories to earn the highest rate of 2 percent.
It has no annual fees and rules guiding it are pretty straight forward. With the Tangerine money back credit card, you make a choice of 2 categories to earn 2%. You earn 0.5% in all other categories.
If you opt to have the cashback earned deposited directly into a Tangerine savings account, you get the option of a third category at 2 %.
Highlights
Income requirement: $12,000
Cashback rate: 2% in up to 3 categories and 0.5% in all other categories
Categories: Grocery, furniture, restaurants,hotel/motel, gas, recurring bills, drug store, home improvement, entertainment, public transportation and parking.
Limit: No limit to cashback earned
Credit score: 660+
Perks: Monthly automated payment of cashback earned into your savings account or rolled back into your credit card. Free cards for authorized users of the account. Categories to earn 2% can be changed should your spending habits change.
Purchase interest rate: 19.95% Cash Advance rate: 19.95% Balance transfer: 19.95%
Best Cashback credit card that pays you for referral
Amex SimplyCash card
Oh my! The refer a friend rewards program for this card is amazing! This makes it stand out from other card referral programs. Imagine being paid for each family and friend you recommend this card to. You could earn a $50 cashback for each approved referral up to a whopping sum of $750 per annum. Talk of an easy way to earn passive income!
This card has no annual fee and also offers a fairly generous welcome bonus. For all charges made to this card in the first 3 months, you will earn 2.5% cashback up to $150. Following this, the cashback rate becomes 1.25% on all categories of purchase.
Highlights
Income requirement: Any
Cashback rate: 2.5% in all categories of purchase charged to the card in the first 3 months. 1.25% in all categories after welcome bonus ends.
Limit: No limit to cashback earned.
Credit score: 660+
Perks: Advanced and reserved ticket access, special offers, and experiences with American express invites®
Travel & Shopping coverage: Travel insurance up to $100,000, purchase protection, close relations referral bonus.
Purchase interest rate: 19.99% Cash Advance rate: 21.99% Balance transfer: N/A
Best No Fee Cashback card for Grocery and Recurring bill payments
BMO Cashback Mastercard
Are you on the lookout for a no-fee cashback credit card that has a great welcome bonus offer as well? The BMO cashback master card might be the answer to your search.
It is currently one of the best cashback credit cards in the Canadian market with an impressive welcome bonus. With this card, you get up to 5% cashback on purchases charged to this card in the first 3 months of ownership. You also get a 1.99% interest rate on balance transfers for the first 9 months with a 1% transfer fee.
Once the welcome bonus rate is up, you get 3% cashback on grocery purchases, 1% on recurring bill payments, and 0.5% unlimited cashback on all other purchases. Not bad for a no-fee cashback card, right?
Highlights
Annual fee: $0
Income requirement: $15,000
Cashback rate: Up to 5% cashback in the first 3 months (welcome bonus). 3% cashback in groceries, 1% in recurring bills and 0.5% unlimited cash back in all other categories after welcome bonus rate ends
Credit score: 660+
Perks: 25% off rentals at participating National car rental and Alamo rent a car locations. Purchase protection and extended warranty on most items charged to the card. Earn more cashback by free addition of other cardholders. Discounts for Cirque du Soleil shows touring Canada and resident shows in Las Vegas
Purchase interest rate: 19.99% Cash Advance rate: 22.99% Balance transfer: 22.99%
Best For Flexibility in choice of Categories and Car and Mobile Insurance
Tangerine World MasterCard®
If you earn an annual income of $60,000 and above and love the flexibility in the choice of categories available with the Tangerine MoneyBack card, certainly the Tangerine World MasterCard is the best for you.
It is Tangerine’s newest card. It combines all of the goodness of the Moneyback card with additional benefits such as car and mobile insurance as well as travel rewards.
Highlights
Income requirement: $60,000 annual income requirement or $100,000 household income requirement or $250,000 or more under management by Tangerine.
Cashback rate: 2% in up to 3 categories and 0.5% in all other categories
Categories: Grocery, furniture, restaurants, hotel/motel, gas, recurring bills, drug store, home improvement, entertainment, public transportation, and parking.
Welcome Bonus: 1.95% interest rate for balance transfer for the first 6 months with a 1% fee
Limit: No limit to cashback earned
Credit score: 725+
Perks: Boingo Wi-fi for MasterCard, savings on a wide range of on on-demand apps and subscription services
Rental Car Insurance: You get damage and theft protection for your car rental when you rent for up to 31 consecutive days and charge the full cost of your rental to your Card.
Mobile device Insurance: Protection on new cell phones, smartphones, or tablets when you charge the full cost to your Card. This insurance plan is also available if you purchase it through a plan and charge all of your wireless bill payments to your Card. The benefit covers up to $1,000 in situations such as loss, theft, accidental damage, or mechanical failure of your mobile device.
Travel: Mastercard Travel Rewards, this gives you access to cashback offers and rebates applied directly to your statement, by using your Tangerine World Mastercard at select merchants that accept Mastercard while traveling outside of Canada.
Shopping coverage: LoungeKey airport experiences with your complimentary membership. It gives you exclusive dining, retail, and spa offers in over 400 airports worldwide, along with access to over 1,000 lounges at $32 USD per visit. Learn more at airport.mastercard.com.
Purchase interest rate: 19.95% Cash Advance rate: 19.95% Balance transfer: 19.95%
Best Cashback Card (with a fee) for grocery, recurring bills and gas
Scotia Momentum® Visa Infinite Card
This card is an excellent choice if you have a large family and spend a huge amount on groceries. It gives a high rate of 4% cashback on grocery stores and recurring bills with merchants such as; Hello fresh, Netflix, chefs plate, and a host of others.
It currently has an amazing special offer upon sign-up of 10% cashback on all purchases for the first 3 months (up to $2,000 in total purchases) and no annual fee in the first year, including on supplementary cards.
Highlights
Income requirement: $60,000 annual income requirement or $100,000 household income requirement or $250,000 or more of assets under management
Cashback rate: Special offer introductory rate of 10% cashback on all purchases for the first 3 months up to $2000 in total purchases. At the end of the promo, you get 4% cashback in grocery stores and recurring bills, 2% in gas and daily transit and 1% in all other categories
Welcome Bonus: No annual fee for the first year
Credit score: 760+
Perks: 24/7 concierge service, hotel collection, and dining and wine country program all associated with the Visa infinite program. See Visainfinite.ca for more details.
Checkout Time savings: For faster checkout, this card comes enabled with Visa payWave, My Mobile Wallet, Visa Checkout, and Apple Pay.
Rental car savings: Save up to 25% off base rates at participating AVIS locations and at participating Budget locations in Canada and the U.S.
Rental Car Insurance: Charge the full cost of your eligible rental car to your Card and you’re automatically insured if your rental is damaged or stolen.
Mobile device Insurance: Protect your new cell phones, smartphones, or tablets purchased using your Card on or after August 1, 2019. You may be covered for up to $1,000 in the event your cell phone, smartphone, or tablet is lost, stolen, accidentally damaged, or experiences mechanical failure.
Travel Emergency Medical Insurance: Coverage for up to $1 million in emergency medical coverage if sudden and unexpected illness or accidental injury should occur while traveling outside your province or territory of residence in Canada. This covers you, your spouse, and each accompanying dependent children.
Trip Cancellation/Interruption Insurance: Coverage for up to $1,500 per person for eligible expenses (maximum $10,000 per trip). This covers you, your spouse, one traveling companion, and your eligible dependent children traveling with you. Eligibility is assured if you charge at least 75% of such trip expenses to your card, but had to cancel your trip for eligible medical or non-medical causes.
Flight delay Insurance: Should you experience a flight delay, you’ll be eligible for reimbursement of necessary expenses, such as hotel accommodations, meals, and other emergency items if you had charged at least 75% of the full ticket cost to your card.
Delayed and Lost Baggage Insurance: Charge the full cost of your transportation tickets to your card, you are insured for delayed or lost baggage.
Purchase Protection & Extended warranty: You are insured against theft, loss, or damage for 90 days from the purchase date for most items purchased with your card. In addition, the manufacturer’s warranty is also doubled for up to one year.
Purchase interest rate: 20.99% Cash Advance rate: 22.99% Balance transfer: 22.99%
Best Cashback card that allows for easy redemption at any time
TD Cashback visa infinite card
Is being able to withdraw your earned cashback at any time what you would like? This card gives you that flexibility of applying the credit to your card balance with a minimum of $25 earned. You don’t have to wait to redeem at the end of the month or year.
It’s a great card that gives a 3% cashback for grocery, gas, and recurring bills. That is to say, it allows a significant percentage of returns in 3 of the most common spending categories.
It is noteworthy to state that there is a limited time offer to earn 10% cashback on all purchases for the first 3 months up to a total spend of $2,000. You will also get no Annual Fee for the first year for the Primary and Additional Cardholders. To enjoy this special offer, applications must be submitted by September 8, 2020.
Highlights
Annual fee: $120
Income requirement: $60,000 annual income requirement or $100,000 household income
Cashback rate: Special offer introductory rate of 10% cashback on all purchases for the first 3 months up to $2000 in total purchases. At the end of the promo, you get 3% cashback in grocery, gas, and recurring bills. 1% in all other categories.
Welcome Bonus: No annual fee for primary and additional cardholders for the first year
Credit score: 725+
Perks: Redeem cashback earned at a minimum of $25. This can be used to reduce your credit balance whenever you like. No expiry to cashback earned as long as the account remains open and in good standing.
24/7 concierge service, hotel collection and dining and wine country program all associated with the Visa infinite program.
Checkout Time savings: For a faster checkout, this card comes enabled with Visa Checkout and Apple Pay.
Rental car savings: Use your Canadian TD Credit Card to save a minimum of 10% off the lowest available base rates in Canada and the U.S., and a minimum of 5% off the lowest available base rates internationally, on qualifying car rentals at participating Avis and Budget locations.
Rental Car Insurance: Charge the full cost of your eligible rental car to your Card and you’re automatically insured if your rental is damaged or stolen.
Mobile device Insurance: Protect your new cell phones, smartphones, or tablets purchased using your Card on or after August 1, 2019. You may be covered for up to $1,000 in the event your cell phone, smartphone, or tablet is lost, stolen, accidentally damaged, or experiences mechanical failure.
Travel Emergency Medical Insurance: As a cardholder, you get up to $2 million of coverage for the first 10 days. If you or your spouse is aged 65 or older, you are covered for the first 4 days of your trip. Additional top-up coverage is available.
Emergency Travel Assistance Services: Help is just a call away. Toll-free access to help in the event of a personal emergency while traveling.
Delayed and Lost Baggage Insurance: Coverage of up to $1,000 per insured person toward the purchase of essentials such as clothes and toiletries dependent on if your baggage is delayed more than 6 hours or lost.
Purchase Protection & Extended warranty: You are insured against theft, loss, or damage for 90 days from the purchase date for most items purchased with your card.
Purchase interest rate: 20.99% Cash Advance rate: 22.99% Balance transfer: 22.99%
Why do some credit cards have annual fees?
Credit cards with annual fees usually offer benefits you don’t get with the no-fee cards. Some of these benefits include higher rebate percentages, travel insurance, medical insurance, luxury concierge benefits, extended warranty, flight benefits, mobile device insurance just to name a few.
If you have a lifestyle that fits into any of these spending habits such as being a frequent traveler, you might want to consider these cards. With these cards, you are able to save on the cost of certain travel necessities such as medical insurance. Ultimately it is a win-win situation as the benefit of having a cashback with a fee then outweighs one without.
What should I consider before applying for a cashback credit card?
Never carry a Balance
While being rewarded for spending in terms of cashback is great, it could also be tempting to spend beyond your budget. If you are going to apply for a cashback credit card, you need to be disciplined in your spending habits. On the other hand, If care is not taken, you could end up in credit card debt. This will be counterproductive as the cash back earned will likely be channeled back to pay off debt with purchase interest.
The best way to responsibly handle a cashback credit card is to always pay your balance back in full. Never carry a balance with cashback credit cards!
Make a comparison of cashback credit cards in the market
Don’t choose a cashback credit card with your just bank because you bank with them, their offer might not be the best for your spending habits! Applying for a credit card is not dependent on whether that financial institution is your primary bank. In the same vein, you do not need a chequing or savings account to apply for a credit card.
Carry out due diligence in terms of the various cashback credit cards available in the market, make your choice and apply.
Consider having other card options
It is usually good to have more than one credit card, in order to maximize your rewards.
As an example, you can pair your no-fee cashback credit cards like Tangerine world MasterCard with no-fee travel miles or points rewards card. This way you enjoy multiple benefits for different situations
Conclusion
To sum up, if you are looking to earn some cash back for spending, then the cashback credit cards are your best options. For instance, they can be paired with various cashback applications for maximum returns.
Choosing a cashback credit card is spending habit dependent. Cashback credit cards with an annual fee should not be dismissed as sometimes the benefits of these types of cards far outweigh the annual fee paid.